Indian rupee weakens on arbitrage
On Wednesday, rupee weakened with banks buying greenback in order to arbitrage in offshore trade. Strike by the workers of state bank affected the trade and kept the volume low.
Rupee was 0.2 percent low with 45.81/83 a dollar at 10.30 am, after a close of 45.72/73 of Tuesday. According to a dealer, with strike at state banks causing low volumes the currency is likely to stick to 45.70/45.95 level. He also said that offshore trade is also exerting pressure on the Indian currency.
To cash the price differential, dollars are purchased by banks from local markets to offshore side.
On Wednesday, failure of talks between chief labor commissioner and the union resulted in declaration of strike by the employees working at Indian public sector bank. The union and the commission were trying to discuss demands for delay stake sales in the banks and salary increase.
It is expected that the $700 billion rescue plan for financial market proposed by United States might edge down the gains at Sensex, which opened 0.5 percent up. According to dealers, rupee could low if oil companies demanded for dollar.